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In defense of this view, Greenspan paints a disturbing view of
the modern world as a financial dystopia in which humans are at
the mercy of a financial machine they have built but can no
longer hope to manage. Greenspan argues:

The problem is that regulators, and for that matter everyone
else, can never get more than a glimpse at the internal workings
of the simplest of modern financial systems. Today’s competitive
markets, whether we seek to recognise it or not, are driven by an
international version of Adam Smith’s “invisible hand” that is
unredeemably opaque. With notably rare exceptions (2008, for
example), the global “invisible hand” has created relatively
stable exchange rates, interest rates, prices, and wage rates.

I can swallow the metaphorical hand that is invisible yet opaque,
but I draw the line at “notably rare” instability.

Notably rare? This modern financial world has not been operating
for more than 30 years. (By many metrics, the period of rapid
financial innovation was kicked off by the inflation and oil
shocks of the 1970s and got underway in earnest with the rise of
computing power and worldwide regulatory reform starting around
1980.) Suppose we set aside the S&L crisis, the lost
decade(s) in Japan, the Asian financial crises of the late 1990s,
etc. Let’s focus on the latest crisis, which many of us would not
confine to a neat little box in 2008. If we attribute three years
of misery to the crisis, “notably rare” is up to ten percent of
the time.

Greenspan’s bleak vision, like Orwell’s before him, may prove
correct. My view is that the financial crisis was not a sad
by-product of modernity but rather a new episode in a very old
story: systems that allow risk taking and innovation are
inherently subject to periodic crises. We can surely avoid
another crisis by outlawing all risk taking. The alternative is
to strive provide a stable backdrop in which productive risk
taking can flourish. The history of financial progress has,
arguably, been one of generally increasing stability‐‐in
economies where development has been allowed to occur‐‐supported
by an evolving system of market and political institutions, laws
and regulations.

Greenspan is right that the Dodd Frank Act, like every hasty
response to upheaval, is grossly imperfect. The Patriot Act comes
to mind. The Federal Reserve Act of 1913 was itself a crisis
response and was substantially modified over more than 20 years
before reaching the form we recognize today.

We should continue the job of reform and not surrender to
Greenspan’s dystopian vision.